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M&T Bank (MTB) to Report Q2 Earnings: What's in the Offing?

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M&T Bank Corporation (MTB - Free Report) is scheduled to report second-quarter 2021 results on Jul 21, before the opening bell. The company’s revenues and earnings are expected to have increased year over year.

M&T Bank delivered a positive earnings surprise of 15% in the first quarter. A rise in loan and deposit balances as well as the recapture of provisions was a tailwind.

Notably, M&T Bank has a decent earnings surprise history, having surpassed estimates in three of the trailing four quarters and missing in the other, with the surprise being 8.07%, on average.

M&T Bank Corporation Price and EPS Surprise


M&T Bank Corporation Price and EPS Surprise

M&T Bank Corporation price-eps-surprise | M&T Bank Corporation Quote

Key Factors to Note

Net Interest Income (NII):  Per the Fed’s latest data, the overall lending scenario was soft in the April-June quarter, with weak home equity, and commercial and industrial loans. Conversely,, commercial real estate and consumer loan portfolios are likely to have offered support.

This along with the flattening of the yield curve and interest rates remaining at the near-zero level is likely to have hindered the company’s NII.

Nevertheless, low deposit costs and higher average interest-earning assets are expected to have been offsetting factors.

The Zacks Consensus Estimate of $133.9 billion for the second-quarter average interest-earning assets suggests an 8.5% rise from the prior-year quarter’s reported number. An increase in interest-earning assets is likely to have driven NII in the quarter under review. The consensus estimate of $966 million for overall NII suggests a marginal increase on a year-over-year basis.

Fee Income: The company is anticipated to have witnessed growth in trust revenues on strong equity markets in the to-be-reported quarter. The Zacks Consensus Estimate of $164 million for the same implies a 7.9% year-over-year improvement.

In the second quarter, deposit balance improved, backed by incremental government aid programs. This is likely to have driven higher revenues from service charges on deposits. The Zacks Consensus Estimate for the same of $96 million suggests a rise of 23.1% from the prior-year quarter.

However, mortgage rates have been low since the past year. Hence, incentive for refinancing activities is likely to have subsided after strong activity in 2020, while flaring housing pricing is anticipated to have affected purchase originations growth in the second quarter. Thus, the factors are expected to have limited M&T Bank’s mortgage banking fee growth in the to-be-reported quarter.

Overall, the Zacks Consensus Estimate for second-quarter other income is pinned at $528 million, indicating year-over-year growth of 8.4%.

Higher Expenses:  Given M&T bank’s ongoing investments in several areas, including operational infrastructure and technology, we expect the company’s expense base to have been under pressure in the second quarter. This is likely to have limited operational efficiency and bottom-line growth.

Here is what our quantitative model predicts:

M&T Bank has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for M&T Bank is +3.52%.

Zacks Rank: M&T Bank currently carries a Zacks Rank of 3.

Earnings and Revenue Estimate

Prior to the second-quarter earnings release, the company is witnessing downward estimate revision, indicating the bearish sentiment of analysts. The Zacks Consensus Estimate for second-quarter earnings has been revised marginally downward to $3.61 over the past week. Nonetheless, the figure suggests a year-over-year increase of 105.1%.

Also, the consensus estimate for revenues of $1.49 billion suggests a 2.8% improvement.

Other Bank Stocks Worth a Look

Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:

KeyCorp (KEY - Free Report) is slated to report quarterly results on Jul 20. The company has an Earnings ESP of +0.26% and a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BankUnited, Inc. (BKU - Free Report) is set to release earnings numbers on Jul 22. The company has a Zacks Rank of 3 and an Earnings ESP of +3.07% at present.

Fifth Third Bancorp (FITB - Free Report) is slated to report quarterly results on Jul 22. The company has an Earnings ESP of +0.92% and a Zacks Rank of 3, currently.

In-Depth Zacks Research for the Tickers Above

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Fifth Third Bancorp (FITB) - free report >>

M&T Bank Corporation (MTB) - free report >>

KeyCorp (KEY) - free report >>

BankUnited, Inc. (BKU) - free report >>